The ESG Imperative
Turning Words Into Action
Contents
3 Forging a Mindset
6 Set Standards with a Sense of Urgency
9 Determine ROI for the Long Haul
11 Develop and Empower Changemakers
14 A Call to Action
Illustrations By Klawe Rzeczy
2022 Jobs Report: Opportunity Amid Recovery 2
Forging a Mindset
The pressure is on for organizations to
get serious about sustainability and social
impact strategies.
T
he pandemic may prove to be a crucible moment for environ-
mental, social and governance (ESG) issues. As the world rallied
to beat the virus, it also faced an onslaught of dire warnings
about climate change and confronted complex questions around
social justice. Executives faced their own reckoning—and it wasn’t
always pretty: Two-thirds of executives in a GlobalData survey pub-
lished in 2022 said they believed the COVID-19 crisis has acted as a
catalyst for increased focus and action on ESG. Yet the report also
found that “inadequate governance practices make it more likely that
companies will fail to meet ESG goals.”
The ESG Imperative: Turning Words Into Action 3
The divide between intention and action isn’t
going unnoticed. “The pandemic changed the
perception of ESG,” says Aman Mourya, PMP,
ESG and framework specialist at investment
data company FactSet, Hyderabad. “Amid
lockdowns and the looming climate crisis, peo-
ple have become more curious about how
companies are operating.”
That scrutiny revealed much room for
improvement. Case in point: climate action—
or perhaps more accurately, climate
inaction. U.N. Secretary-General Antonio
Guterres called the most recent report
by the Intergovernmental Panel on Climate
Change “a file of shame, cataloging the
empty pledges that put us firmly on track
toward an unlivable world.”
While respondents in the GlobalData knowledge to make informed decisions
report ranked risk management as the about climate-related risks. For instance,
most important governance factor 70 percent have yet to determine how
around ESG, leaders seem woefully unpre- climate change will impact the company’s
pared to manage and mitigate the dan- operations, supply chain and customers.
gers. In fact, a 2022 Deloitte report found It’s a staggering omission that will require
that nearly 60 percent of respondents organizations to counter complacency by
said the leaders who assess business establishing clear standards and expec-
threats and opportunities fail to address tations. And in many cases, there may
climate change during meetings. What’s soon be no choice but to level up. Last
more, nearly half said they lack adequate year, climate disclosure became manda-
tory for publicly listed companies in the
United Kingdom, Japan, New Zealand,
and Singapore—while U.S. and European
Union regulators plan to increase disclo-
sure requirements this year. At the same
time, organizations around the world are
“The
trying to make up for lost ground. Many
pandemic
government and corporate leaders, for
changed the
example, are backing up their vows to be
perception
carbon-neutral by 2050—or even earlier—
of ESG.”
with a slew of ambitious projects.
—Aman Mourya,
PMP, FactSet Just contemplating the kind of action
The ESG Imperative: Turning Words Into Action 4
necessary can be overwhelming, espe- in the way companies do business. Project
cially as many companies try to innovate leaders will be the beating heart at the
their way out of a stubbornly stagnant center of this change.
economy. Now more than ever, they rely “ESG imperatives cover so many differ-
on projects to fulfill their ESG mission— ent areas—operations, sustainability, social,
whether it’s improving diversity on a board, technology, compliance—and project man-
limiting the carbon footprint of supply agers are going to be an extremely valu-
chains, or removing toxic waste from a able asset to this entire process, from end
community’s water supply. And companies to end,” says Kathryn Connolly, PMP, ESG
must also ensure those projects are truly program development manager at global
delivering, whether the measure is an inter- law firm Paul, Weiss, Rifkind, Wharton &
nal gauge, U.N. Sustainable Development Garrison, Toronto.
Goals (SDGs), or government regulations. Here’s how project leaders and their
It’s the kind of seismic—and systemic— teams can move beyond the buzz to deliver
change that requires a fundamental shift meaningful change.
A Clarion Call for ESG
Organizations appear to be poised for action on
environmental, social and governance (ESG) issues.
67% 91% 69%
of ESG leaders and execs plan to change their
believe organizations
believe the pandemic has been companies’ policies or
need targets in place
a catalyst for increased action practices in the next five years
to meet ESG goals.
and focus on ESG issues. to achieve ESG objectives.
Where are companies putting the priority? Which ESG issues need the most attention?
Environment
69%
Social
16%
Governance ENVIRONMENT SOCIAL GOVERNANCE
Climate change Healthcare and diversity Risk management and
15% and pollution and inclusion corporate structure
Source: ESG Strategy Survey, GlobalData, 2022
The ESG Imperative: Turning Words Into Action 5
Set Standards with a
Sense of Urgency
As attention to ESG escalates, organizations need a proper infrastruc-
ture to ensure project teams can raise the bar on positive impact while
still delivering bottom-line results—or, perhaps even more importantly,
recalibrate if something isn’t working. Integrating such processes and
documentation keeps ESG front of mind for project leaders and their
teams, even as those goals and requirements might shift.
The first step is typically an assessment that identifies the ESG fac-
tors most critical to a company and its stakeholders. Not only does
such an audit pinpoint gaps and opportunities, but it also lets compa-
nies compare their ESG objectives to those of their competitors. “That
then dictates where you need to go with your strategy,” says Connolly.
The ESG Imperative: Turning Words Into Action 6
There’s no shortage of external forces to
guide—or accelerate—ESG ambitions. For
instance, in March, the U.S. Securities and
Exchange Commission unveiled a proposal
to enhance and standardize climate-related
reporting. If approved, companies would
need to meet compliance by 2024.
After the U.N. approved its Global Agenda
for Sustainable Development in 2015, Main-
stream Renewable Power (MRP) reset its
framework to align with the U.N.’s 17 SDGs.
The Irish wind and solar energy company
now measures performance against 12 of
them that apply to its project activities:
• Good health and wellbeing
• Gender equality MAKING ESG A REALITY
• Affordable and clean energy
• Decent work and economic growth For decades, when organizations sought
• Industry, innovation and infrastructure to deliver positive change in the world, they
often defaulted to the shareholder-driven
• Sustainable cities and communities impulses under the guise of corporate social
• Responsible consumption and production responsibility. But as expectations for deliv-
• Climate action ering serious social and environmental impact
shift, organizations need to embrace a wider
• Life below water stakeholder-centric perspective that also
• Life on land establishes accountability and rigor.
• Peace and justice strong institutions
Now more than ever, organizations need to
• Partnerships for the goals understand the power of environmental,
social and governance (ESG). ESG provides
structure that ensures there’s a quantifi-
As part of the company’s ESG strategy, a
able payoff inside and outside the orga-
single project often can fulfill multiple SDGs at nization. Much in the same way a project
once. For example, MRP last year completed management office builds formal gover-
nance, ESG helps organizations set clear
the Alena wind farm in Chile that provides
criteria to track sustainability and social
electricity for more than 113,000 homes in the good—and create enterprise-wide ethos
Biobio region and reduces annual carbon diox- for achieving long-term ROI.
ide emissions by more than 110,000 metric PMI empowers and enables individuals
tons (compared to conventional power gen- and organizations to drive social impact
eration). At the same time, the organization and change—tackling the world’s biggest
challenges, through learning and developing
chose a woman to be the project site man- project management skills, to make ideas
ager to ensure gender diversity and elevate into a reality.
the work of females across the team. Project
leaders also prioritized regular communication
The ESG Imperative: Turning Words Into Action 7
with community members, so they become a
true partner in generating a positive impact.
“As human beings, we must develop activities
that promote not only caring for the environ-
ment, but also tolerance, respect and social
awareness, among many other factors,” says
“We must develop activities
Nicolas Fabbri, PMP, the company’s construc-
that promote not only caring
tion project manager leader in Santiago. “At
for the environment, but also
MRP, this understanding is in our DNA, and we
tolerance, respect and social
understand that it’s vital to have a positive
awareness.”
impact not only on the environment but also
—Nicolas Fabbri, PMP, Mainstream Renewable Power
on our communities.”
Creating—and maintaining—an ESG
mission with meaning and intent requires
project leaders to reinforce the orga-
nization’s strategic vision with each new
initiative. It also means managing up to
make sure sponsors and executives are
properly and promptly engaged and
actively bolstering external engagement.
As head of ESG at Tharisa plc in Johannes-
burg, Tebogo Matsimela sees the rewards of
proactively identifying, engaging and man-
aging internal and external stakeholders—
whether they are C-suite leaders or people
in communities near project sites. By swiftly
gathering—and sharing—information, the
company creates the kind of feedback loop
that mitigates disruptions.
“An informed stakeholder is a very progres-
sive and powerful stakeholder,” he says. “An
uninformed stakeholder is very dangerous.
Don’t wait for stakeholders to find out in the
media about what’s happening.”
To ensure the project delivers for the
company and the community, Tharisa holds
monthly meetings with government leaders,
designates a community liaison officer, and
establishes a dedicated management team
to track social and economic impacts.
The ESG Imperative: Turning Words Into Action 8
Determine ROI for the Long Haul
As the stakes intensify and the circle of stakeholders widens, there’s
little margin for error. And the onus is on organizations to establish
clear metrics that prove they’re delivering—or to flag when they’re
not—with the type of information that lets them course-correct.
Tracking progress on core ESG goals, like a drop in single-use plastics
or ensuring a project doesn’t interfere with a community’s biodi-
versity, is a given. But teams also need to assess how each initiative
helps the organization: Does it cut costs, create efficiencies, attract
new talent, improve reputation and/or spark growth?
In a 2022 survey by NTT, respondents ranked higher profitability as
a top benefit of companies having a sustainability strategy. There’s
also the need to juggle investor interests: 27 percent of respondents
in the Deloitte report cite conflicting messages from investors, who
push for costly long-term climate-change adjustments while still
expecting short-term financial gains.
The ESG Imperative: Turning Words Into Action 9
But the ROI goes beyond the bottom line, rics around worker safety, which is critical
with respondents reporting greater innova- to employee well-being and the mining
tion and teamwork. A company’s reputation company’s bottom line. Of the 44 mining
on ESG can influence buying habits, too— deaths reported worldwide in 2020, half of
particularly among younger consumers. More them occurred in South Africa. Yet as of
than one-quarter of millennials and Gen Zers the third quarter of 2021, Tharisa had gone
said certain businesses’ impact on the envi- more than six years—or more than 5 million
ronment had influenced their buying decisions, shifts—without a fatality in its mining opera-
according to a 2021 Deloitte report. tions. “Our record speaks to the integration
A company’s ESG efforts can also boost— of ESG and safety principles within the orga-
or scuttle—talent management efforts. As nization,” says Matsimela.
companies struggle to recruit and retain Along with the traditional surveys, question-
rock-star employees during The Great naires and focus groups, some companies
Reshuffle, a strong ESG vision can often are leveraging technology to paint a more
make a difference. SHRM’s 2021-2022 work- robust picture of their reputation in the mar-
place survey, for example, found organiza- ketplace and capture ESG nuances that could
tions with ineffective diversity, equity and be turned into a competitive advantage.
inclusion (DE&I) initiatives were 32 percent “There are a lot of platforms that use AI
more likely to have climbing resignation rates. to pull from social media and news and give
Establishing such engagement metrics another lens into what the sentiment is—
doesn’t necessarily require an overhaul, Con- whether it’s ESG broadly, or a specific issue
nolly says. Most companies already solicit for the company,” says Connolly.
feedback from employees and other stake- The payoff? By looking beyond just prof-
holders, so it may be a matter of simply adding its or stock prices to include more holistic
a few targeted questions about ESG efforts. ESG metrics, leaders can better position
Tharisa also tracks more tangible met- their company for the future.
Climate Change Disconnect
58% 70%
of organizations say the leaders who assess have yet to assess how climate change will
business threats and opportunities fail to impact the company’s operations, supply
address climate change during meetings. chain and customers.
What’s holding companies back?
65% Lack of clear carbon reduction strategy, an action
plan with milestones and a way to hold management
accountable for it
46% Poor data and/or lack of accurate and
complete management information
37% No clear way to tie progress to metrics in
executive pay
34% Shortage of trained climate-literate talent
Source: The Audit Committee Frontier—Addressing Climate Change, Deloitte, 2021
The ESG Imperative: Turning Words Into Action 10
Develop and Empower
Changemakers
As many companies hit reset on ESG, some may find themselves star-
ing down a talent void. According to a LinkedIn global report published
in February, demand for green jobs will outstrip supply over the next
five years. To bridge the gap, the priority will be on hiring project lead-
ers with ESG knowledge and experience—and upskilling existing talent
to seed an ESG ethos across the enterprise.
Project professionals can step up on their own, too, by honing
new must-have skills. Having a baseline understanding of data anal-
ysis, for example, can help team members more accurately predict
and map out risks so they can prioritize the right ESG initiatives and
assess ROI. Fine-tuning creative problem-solving skills can come in
handy if teams need to mitigate a potential negative social or envi-
ronmental impact. And coupling that kind of critical thinking with
empathy positions leaders to better navigate multiple perspectives.
The result? An ability to influence all levels of stakeholders—and
provide an example for aspiring ESG changemakers to follow.
The ESG Imperative: Turning Words Into Action 11
A big part of Connolly’s role is to ensure
project activities align with the firm’s ESG
strategy—so each initiative delivers positive
impact. By connecting the dots between
MAKING A DIFFERENCE
ESG and the big-picture benefits, she helps
ensure all key stakeholders will embrace the A project leader teaming up with an NGO to
processes that are necessary to achieve remove trash from a local waterway. A PMI
chapter creating audio books for visually
ESG goals and objectives.
challenged college students. A project lead-
“There’s so much breadth to cover with er volunteering her time to create a digital
ESG that project managers are going to platform connecting youth from across
Africa to empower climate change and
be an extremely valuable asset to this
COVID-19 recovery.
entire process from end to end,” Connolly
says. “You need to implement ESG strat- It’s not just companies dedicating their
efforts to environmental, social and gover-
egy into the guts of the organization—and nance (ESG) issues. Individual project leaders
project managers are going to be an are, too—and PMI is dedicated to enabling
active part of that change.” changemakers around the world to elevate
their positive impact on society. The Hours
Connolly believes many project profes- for Impact program supports the United
sionals will be quick ESG studies because Nations’ 17 Sustainable Development Goals
(SDGs) to better people’s lives and the
they already have a strong foundation
planet.
upon which to build their knowledge. There’s
also an opportunity for organizations to In 2021, PMI called upon its global communi-
ty and set a goal to pledge 100,000 hours
incentivize learning, such as leaning into
of service to advance the SDGs. This year,
resources—like PMI’s partnership with it’s aiming higher with a new objective of
Green Project Management—or investing in 125,000 hours. Ready to turn ESG ideas
into action? Make your pledge here.
certifications for employees. For instance,
she says having the Project Management
Professional (PMP)® certification “will defi-
nitely help in implementing ESG-related
initiatives and goals—closing gaps, lowering
risks and enabling opportunities.”
“It’s not a brand-new world of project
management. You’re simply touching on
different requirements and engaging with
different stakeholders—an approach that’s
“You need to implement ESG
similar to any other project,” Connolly says.
strategy into the guts of the
FactSet embeds ESG training from the
organization—and project
start, says Mourya. As part of the compa-
managers are going to be an
ny’s onboarding, new workers get a crash
active part of that change.”
course on Global Reporting Initiative Stan-
—Kathryn Connolly, PMP, Paul, Weiss, Rifkind,
dards and how the sustainability benchmarks Wharton & Garrison
The ESG Imperative: Turning Words Into Action 12
impact organizations. Onboardings also shine has a department dedicated to external
a spotlight on FactSet’s ESG imperatives and affairs, communications and communi-
how employees make a difference outside ties. That group works closely with project
of the typical work environment, such as teams to provide them with guidance, sup-
volunteering in the community. The payoff: port and training on all matters related to
In 2021, the company logged some 14,000 ESG—ensuring they stay aligned with the
service hours. Such initiatives not only foster company’s standards and expectations.
employee engagement and buy-in, but also “As a project leader, it’s important for me
teach team members how to better navi- to ensure that all of our project activities
gate stakeholder demands. are carried out efficiently and in line with
At MRP, ESG training is considered a our corporate values, including collaboration,
must-have, Fabbri says. It not only helps respect and responsible interaction with
team members develop the skills they need our communities,” Fabbri says. “Ultimately,
to help the company achieve its ambitious the aim is not just to bring the communities
goals, but also reinforces the mindset that closer to our projects but bring our proj-
its projects should generate long-term ects—and the people who work on them—
value for communities. For example, MRP closer to communities.”
The Power of ESG
Going in with a strategy for sustainability can be a huge
boost to business performance—now and in the future.
Now In 2 years
Increased top-line 45%
revenue growth 68%
Improved 44%
profitability
54%
Greater innovation/new 32%
business models 42%
Greater 32%
teamwork 36%
Stronger 30%
reputation 40%
Source: Innovating for a Sustainable Future, NTT, 2022
The ESG Imperative: Turning Words Into Action 13
A Call to Action
A strong commitment to ESG isn’t just the right thing to do; it’s the
smart thing to do. It’s what society demands of modern business—and
that means showing clear evidence of progress. Companies must
ensure that positive social impact is embedded into the very fiber of
their projects—whether the intent is to boost inclusion among employ-
ees or improve access to healthcare.
By resetting expectations, diving into data to track progress, and
empowering project leaders to become changemakers, companies
can turn intent into action and deliver projects that make the world a
better place.
The ESG Imperative: Turning Words Into Action 14
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